Finance Ireland first to offer 20-year fixed rate mortgages

Finance Ireland first to offer 20-year fixed rate mortgages

Posted on 13May

Rates range from 2.40% to 2.99% and will be available for up to 90% loan to value mortgages.

Non-bank lender Finance Ireland is launching a range of long-term fixed rate mortgages for home owners in Ireland, with options up to 20 years available.

The company, which entered the residential mortgage market in 2018, will also offer 10 and 15-year fixed rate mortgages, with rates ranging from 2.40 per cent to 2.99 per cent, depending on the loan to value and the period.

The maximum term of 20 years is twice as long as currently available to Irish mortgage customers. Even then, the 10 year fixed rates are typically offered on loans with a loan to value of typically around 60 per cent, although some will offer on as much as 80 per cent loan to value.

Finance Ireland’s new products are targeting owner-occupiers, rather than buy to let investors, and could appeal to customers finishing fixed rates with existing lenders, including Ulster Bank and KBC Ireland who are set to leave the Irish market. The company distributes its mortgages through brokers. The State’s Ireland Strategic Investment Fund (ISIF) and US investment giant Pimco each hold 31 per cent stakes in the Billy Kane founded company.

The rates will be available for up to 90 per cent loan to value mortgages, and customers will be able to move their mortgages to new properties during the term without incurring penalties, Finance Ireland said.

The fixed rate can also be decreased as the loan is paid down versus the property value, and customers will be able to overpay up to 10 per cent of the outstanding mortgage balance as a lump sum in each year of the fixed term, should their financial circumstances allow.

Managing director Donal Doran said those details were essential to the product. “It’s very clear that you cannot put out a 20 year fixed rate without the flexibilities,” he said. “We’ve developed this based on feedback and what brokers believe their customers have been asking them.”

The loans will also allow for changes in personal circumstances, with the penalty for repaying the loan early capped at 5 per cent of the loan balance in the first five years of the loan term for 15 and 20 year loans, and 2.5 per cent for the following five years. In the final five years of the 20 year loans, no early redemption charge will apply.

‘Booster shot’

The move was welcomed by Brokers Ireland, who said it gives a “booster shot” to competition and brings security to Irish mortgage holders.

“We have always maintained that mortgages are long-term products for which lenders can readily source long-term funding. That makes them very secure – for consumers and for lenders,” said Rachel McGovern, director of financial services at Brokers Ireland. “That they are only now entering the Irish market indicates just how staid, unimaginative and above all non-consumer-friendly the Irish mortgage market has been. In fact 10 year mortgages have only been introduced in recent years.”

However, she noted the rates were still higher than in other European countries, where long-term fixed rates have been the norm for years.

The announcement was a “good news day for new and existing mortgage holders”, said chairperson of the Association of Irish Mortgage Advisors Trevor Grant.

The country had become “accustomed to accepting uncertainty around the cost of financing our home purchases”. “If a developer told us the price of a house could be €300,000 or maybe €350,000 or possibly even €400,000 and that they could only confirm the price after we bought the house, we’d run a mile, yet we seem to accept uncertainty when it comes to the cost of mortgages.”

Managing director of mortgage advice company doddl.ie, Martina Hennessy, said the news was “a boost to the broker market”. “Crucially, if you stay with Finance Ireland and you move house, you can transfer the rate on your current mortgage to your new home without incurring a penalty.”

The move is likely to put pressure on other lenders to see them follow suit, said

Joey Sheahan, head of credit at MyMortgages.ie.

“This news from Finance Ireland is really likely to shake things up – both in terms of how mortgage holders approach their choice of term and rates, and in the fact that if the demand for these products are strong, other lenders will make moves to bring similar offerings on stream.”

‘Significant innovation’

Mr Kane, chief executive of Finance Ireland, said, “I’ve been involved with the Irish mortgage market for over 30 years and I believe that this is one of the most significant innovations made here in that time,” said.

Finance Ireland entered the home loans market in late 2018 after it bought Pepper Money’s €200 million home loans portfolio and mortgages platform, with UK asset manager M&G Investments providing the funding.

It was forced to abandon plans for a €100 million-plus initial public offering in May 2020 as the rapid spread of Covid-19 globally threw equity markets into turmoil. Mr Kane, a former chief executive of Irish Permanent said last month it would look at floating on the stock market in the second half of next year at the earliest.

Source: https://www.irishtimes.com/business/financial-services/finance-ireland-first-to-offer-20-year-fixed-rate-mortgages-1.4563959

 


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New mortgage option set to shake up the market for homebuyers

Posted on 11May

A new mortgage option is set to shake up the market here as it offers Ireland’s first 20-year fixed-rate mortgage, providing a massive boost for the struggling property market.

Finance Ireland is launching a range of competitive long-term fixed-rate loans with rates for a 20- year fixed term mortgage ranging from 2.4% to 2.99% for up to 90% loan-to-value mortgages.

And best of all, the non-bank lender is backed by taxpayer cash, as the State-owned Strategic Investment Fund has a 30% stake in Finance Ireland.

The welcome move will pile pressure on banks to offer more competitive mortgage rates, something that is seen as a major boost for homebuyers.

The new cut-price rates would see homeowner repayments of just €1,052 a month on a €270,000 30-year mortgage with the first 20 years fixed at 2.99%.

Finance Minister Paschal Donohoe was not involved in the decision to back the deal but a spokesman said yesterday: ‘The Department [of Finance] welcomes the announcement which provides a new product for customers and will help to drive competition in the mortgage market.’

It came as President Michael D. Higgins yesterday became the latest to comment on the country’s housing crisis, saying that ‘radical solutions’ are ‘urgently needed given the magnitude of a housing crisis that is not abating’.

Reports published this week highlight a chronic shortage of properties that have resulted in soaring house prices while rents continue to skyrocket.

The historical new low 20-year fixed-term home loan was hailed by housing campaigners last night as welcome news for families struggling to get on the property ladder, saying other banks are sure to follow suit.

David Hall, of the Irish Mortgage Holders Organisation, said: ‘It’s good news and gives some people certainty for 20 years.’

The announcement was a ‘good news day for new and existing mortgage holders’, Association of Irish Mortgage Advisors chairperson Trevor Grant said.

Currently, the longest fixed-rate mortgage available in the Irish market is seven years – with a handful of providers offering a ten-year term but capped at an LTV of 80%. The Finance Ireland fixed rates are available for up to 90% LTV mortgages.

Rachel McGovern, director of financial services at Brokers Ireland, said: ‘That they are only now entering the Irish market indicates just how staid, unimaginative and, above all, non-consumer-friendly the Irish mortgage market has been. In fact, ten-year mortgages have only been introduced in recent years.’

Joey Sheahan, head of credit at MyMortgages.ie, said: ‘This news from Finance Ireland is really likely to shake things up – both in terms of how mortgage-holders approach their choice of term and rates, and in the fact that if the demand for these products are strong, other lenders will make moves to bring similar offerings on stream.’

The new lender is offering European-style home loans fixed for 20 years from as low as 2.6%.

Its arrival is sure to be welcomed by borrowers after recent announcements by KBC and Ulster Bank that they are pulling out of the Irish banking market.

Finance Ireland chief Billy Kane said: ‘I’ve been involved with the Irish mortgage market for over 30 years and I believe that this is one of the most significant innovations made here in that time.

‘We’ve been working on the introduction of longer dated fixed-rates for some time now in order to allow customers benefit from the historically low interest rates now available. These fixed terms, combined with flexible features, provide exceptional certainty for customers and are a stated priority of the Government.

‘We only distribute our mortgages through regulated intermediaries which ensures that all of our customers have advice about the suitability of any product to their specific needs.’

A spokesman for the Ireland Strategic Investment Fund (ISIF) said: ‘All ISIF investments are made on a commercial basis, in line with its double bottom line mandate of generating a commercial return and supporting economic activity and employment in Ireland. The announcement of new mortgage products today is a result of a commercial decision by the management of Finance Ireland, in which ISIF holds a minority shareholding.’

The maximum term of 20 years is twice as long as currently on offer in the mortgage market and will mean some home-buyers may be able to have a fixed rate for the full term of their mortgage.

The fixed-rate terms launched yesterday are for periods of ten, 15 and 20 years.

The fixed rates range from 2.40% to 2.99% depending on loan-to-value and the fixed-term period.

A 20-year fixed-rate mortgage for up to 90% of the value of the home is priced at just 2.99%.

Customers can also move their mortgage to a new property during the term of the fixed rate without incurring any penalty, can pay back a lump sum of up to 10% of their outstanding balance, without penalty, in each year of the fixed term.

Trevor Grant, of the Association of Irish Mortgage Advisors, said: ‘Given the recent negative news regarding KBC and Ulster Bank, this is a good news day for new and existing mortgage-holders and for competition in the market.’

Source: https://extra.ie/2021/05/14/business/property/new-mortgage-option


Irish Times: How to buy a fixer-upper and not get burned

Posted on 18Mar

By Joanne Hunt, Irish Times

So you’re thinking of buying a fixer-upper? Maybe it is a faded period charmer that hooked you, or an ugly bargain on a great street. But before you sign a contract, some hard questions will help you sort the diamond in the rough from the money pit.

Assess

When, halfway through a home renovation, TV presenters announce “Asbestos!’, building surveyors must scratch their heads. “It makes good telly, but that would have been evident if a good inspection was done on day one,” says Noel Larkin of Noel Larkin and Associates Chartered Building Surveyors. His top recommendation for those buying an old house is to get a building survey done first. This should eliminate surprises and indicate the cost of renovation.

Read More: https://www.irishtimes.com/life-and-style/homes-and-property/new-to-market/how-to-buy-a-fixer-upper-and-not-get-burned-1.4510065?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Flife-and-style%2Fhomes-and-property%2Fnew-to-market%2Fhow-to-buy-a-fixer-upper-and-not-get-burned-1.4510065


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